Of all the stories that are part of the global financial crisis, the potential collapse of General Motors Corp. is, to me, both the scariest and the most fascinating. So far, most of the headlines have been about the company's efforts to lobby for government assistance, and speculation about what could happen if it fails. Our sister newspaper Automotive News posted a very good editorial on the topic -- the headline is "The cost of GM's death." The story is only available to AN subscribers, but here's a taste:
If Congress thinks a bailout of General Motors is expensive, it should consider the cost of a GM failure. Let's be clear. The alternative to government cash for GM is not a dreamy Chapter 11 filing, a reorganization that puts dealers and the UAW in their place, ensuring future success. No, even if GM could get debtor-in-possession financing to keep the lights on (which it can't), Chapter 11 means a collapse of sales and a spiral into a Chapter 7 liquidation. GM's 100,000 American jobs will die. Health care for a million Americans will be lost or at risk. Hundreds of GM's 1,300 suppliers will die. Their collapse could take down Ford Motor Co. and Chrysler LLC, perhaps even North American transplants. Dealers in every county of America will close. The government will face greater unemployment, more Americans without health insurance and greater pension liabilities.The column concludes: "Absent a bailout, GM dies, and with it much of manufacturing in America. Congress needs to do the right thing -- now." It's amazing to me that there are people in Washington who don't understand all that. Are they so far removed from caring about U.S. manufacturing that they would allow this to happen? Say what you want about the quality of GM's management -- but in my book, the politicians who would refuse to save GM are completely incompetent.